Spring Rural properties face record demand

A trifecta of strong conditions have combined to create record demand for rural property, with the trend for multimillion-dollar sales to continue.

Cobran Station – one of Australia’s best-known irrigation farms – has been listed for sale for $40-$50 million.

A flood of multimillion-dollar farms has hit the market as sellers rush to cash in on record demand for rural property.

The record spring sell-off has been attributed to strong support from domestic and international buyers, and buoyed by a perfect storm of low interest rates, improved seasonal conditions and strong farmgate commodity prices.

Experts say the trend, which has seen rural land prices in some parts of the state more than double in the past 24 months, is likely to continue for some time yet.

In the past week:

US-backed Laguna Bay Agricultural Fund listed its 3353-hectare Woorndoo cropping operation near Lake Bolac in the Western District with expectations of more than $70 million.

AMERICAN teacher superannuation fund TIAA-CREF offered Cobran Station – one of Australia’s best-known irrigation farms – for $40-$50 million. Not included in that price are the property’s significant water titles, expected to be worth a further tens of millions of dollars.

AAM Investment Group launched a $70 million fund to purchase the 34,005ha Mount Harden livestock aggregation near Blackall in Queensland and two softwood timber supply chain businesses in South Australia and Queensland.

LAWD senior director Danny Thomas said there was unprecedented demand for high-quality rural holdings from both established farming families and institutions.

“There’s a lot of commentary around about the market being irrational, but I don’t see it that way,” Mr Thomas said.

“The buyers I deal with are making rational decisions about how to grow their businesses, optimising operational scale and future proofing their operations. There are a number of families making multi-generational decisions and locking in their funding costs for the next seven to 10 years.

“In my mind that makes a lot of sense.”

AAM managing director Garry Edwards said there was “inherent strength” in businesses and assets linked to essential food security.

The company, which has invested in poultry, grain, cotton, beef, lamb and wool assets across 11 sites in four Australian states, shows no sign of slowing down as the property market heats up. AAM forecasts it will more than double its farmland and agricultural supply chain assets under management by 2022 up to a value of $600 million from $250 million.

“Our investments are purposefully divergent in their location and production systems, yet entirely aligned in meeting the most basic human requirement for high-quality food and fibre,” Mr Edwards said.

Inglis Rural Property sales agent Sam Triggs said he was seeing “significant capital inflow from the northern hemisphere” alongside family farmers “expanding aggressively” to cash in on “a trifecta of low interest rates, strong commodity prices and good seasons”.

Strong prices across a range of commodities were giving investors confidence, and Australia was seen as a safe and reliable place to invest, he said.

Mr Triggs said increasingly new partnerships were emerging that combined local management and knowledge with large corporate funding in co-equity partnerships.

“We’re seeing a shift towards more creative investment models rather than the traditional model,” he said.

JLL agribusiness director Geoff Warriner said he didn’t expect the strong demand, particularly in the livestock sector, to dampen any time soon.

“The beef sector will stay up until the until the Australian herd’s back to its normal levels, which will take a couple of years,” he said.

Additional significant corporate offerings this spring include US private equity firm Proterra Investment Partners’ 22,500ha Corinella Group of properties in Victoria and South Australia, on the market for $350 million, and Aware Super’s farming portfolio around Lake Boga in northern Victoria, which is expected to fetch $150 million.

The Corinella offering, which includes farms around Lake Bolac, near Ararat and Stawell, as well as at Navarre, is understood to be one of the biggest-ever offerings of prime farmland in southeast Australia.